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September 3, 2002

Hon. Mitchell E. Daniels, Jr.
Office of Management and Budget
Eisenhower Executive Office Building
17th Street & Pennsylvania Avenue, N.W.
Washington, D.C. 20503

Re: Proposed Executive Order on Public Participation in Agency Settlements

Dear Mr. Daniels:

The Center for Regulatory Effectiveness ("CRE") requests that you consider recommending for President Bush's signature the attached draft Executive Order on Public Participation in Agency Settlements. This proposed Executive Order would provide prior public notice of and a right to comment on agency settlements that impact federal regulatory programs.

The public already has the right to participate in the formulation of certain consent decrees. More specifically, under 28 C.F.R. § 50.7, the public already has the a right to prior notice and an opportunity to comment on proposed consent judgements when the Government sues as a plaintiff to enjoin certain environmental violations. The public should also have prior public notice and comment rights when the Government as a defendant settles environmental or any other type of litigation. In addition, under 15 U.S.C. § 16(b)-(f) the public has a right to prior public notice and an opportunity to comment on proposed antitrust consent judgements. This right includes the right to review and comment on an Impact Statement prepared by the Government for the proposed consent judgment. An antitrust Impact Statement explains the competitive impact of the proposed consent judgment. An Impact Statement assessing the regulatory impacts should also be provided when the Government as a defendant proposes a settlement that impacts any federal regulatory program.

Federal agency settlements often commit an agency to regulatory action that substantially affects the rights and duties of many persons who are not parties to the case. Because they are not parties, most of the affected public now has no voice in an agency's decision to settle. In many cases, most of the affected public does not even know of the settlement until after the fact. Settlements without prior public notice and comment disadvantage the agency. Without prior public notice and comment, the agency may agree to settle a case on terms that are inappropriate, unreasonable or improper for reasons not even known to the settling agency. The attached draft Executive Order would solve these problems by providing a nonpartisan right to prior public notice and comment and an Impact Statement for the proposed settlement. This proposed Executive Order does not protect or serve any special interest. Instead, it protects the public interest by providing all stakeholders notice and a right to be heard, and it ensures that an agency is fully informed before it settles.

One glaring example of the urgent need for this Executive Order is the EPA settlement in the case NRDC v. Whitman, 2001 WL 1221774 (N.D. Cal. 2001). The consent judgment and settlement agreement in the NRDC case dictate EPA's implementation of the Food Quality Protection Act for years to come. EPA's settlement with NRDC substantially affects and is opposed by persons with very diverse interests, ranging from pesticide manufacturers to farmers to animal rights activists. EPA first agreed to the NRDC settlement in the last hours of the prior Administration with very little notice to the actual intervening parties in the case, and no prior public notice or public comment opportunity. Before approving the NRDC settlement, the Court itself ordered EPA to provide public notice and to allow public comment on it because: "The subject of the settlement is a matter of considerable public interest." The Court emphasized that EPA's settlement with NRDC was negotiated in a very short time "without an opportunity for meaningful comment by even the interested parties who have already appeared in this case." The Court concluded that an opportunity for public comment was required "for the benefit of EPA' as well as the public and the Court.

The attached draft Executive Order eliminates the possibility of back-room settlements between any federal agency and any special interest group. It promotes regulatory transparency and a voice for all stakeholders. It is carefully drafted to minimize any additional burden on agencies. It will not encourage litigation because it only applies when there already is litigation. It contains several exemptions to ensure consistency with statutory requirements and national security interests. It only establishes a public-notice-and-comment right that already exists in some regulatory contexts, and should exist in all.

On behalf of CRE and the public interest, I ask you to consider recommending the attached Executive Order for President Bush's signature.


Jim J. Tozzi,
Member, CRE Board of Advisors